TaxTMI 
TaxTMI 
2013 (8) TMI 252
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....the statute by the Finance Act, 2002 ? (3) Whether the Assessing Authority was justified in assessing the assessee Development Authority as Artificial Juridical Person instead of a Local Authority ? " 2. Briefly stated the facts of the present case are that the assessee, Muzaffarnagar Development Authority (hereinafter referred to as 'MDA') was created by an enactment of Uttar Pradesh Urban Planning and Development Act, 1973 vide notification (G.O.) No. 4521/9 Awas-5-96-1-Gathan-96, dated 21.11.1996 for the objects of planning, Development and Improvement of cities, towns and villages for general public utility. The assessee had applied for registration under Section 12A(a) of the Income Tax Act, 1961 on 31.3.2003 but the same has not been disposed of within the time prescribed under Section 12AA(2) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). The assessee claimed exemption under Sections 11 and 12 of the Act and exercised the option available under clause (2) of the Explanation to Section 11(1) of the Act for the receipts / income remained unutilized during the previous year relevant to the Assessment Year 2004-05. The assessee filed the return of inco....
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....rm and manner to the Commissioner. He submits that Section 12AA(2) of the Act merely provides that order granting or refusing to registration shall be passed before the expiry of six month from the end of the month in which the application was received but it does not mean that if the order granting or refusing to grant registration could not be passed then the registration shall be deemed to have been granted. He submits that the aforesaid Special Bench judment as well as the Division Bench judgment of this Court in the case of Society for the Promotion of Education, Adventure Sport & Conservation of Environment Vs. Commissioner of Income Tax, Central, Kanpur (2008) 171 Taxman 113 (All.) does not lay down the correct law. He submits that such provision are directory and not passing the order within the time specified shall not result in deemed grant of registration. He submits that there is nothing in Section 12AA(2) of the Act which provides for deemed grant of registration and as such the aforesaid two judgments holding that when an order under Section 12AA is not passed within the period specified under sub-section (2), then the registration shall be deemed to have been granted....
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....ferred to paragraph Nos. 9, 10, 13 and 18 of this judgment. He further submits that in these circumstances the substantial question of law as framed in the memorandum of appeal is squarely covered by aforesaid Division Bench judgment of this Court and therefore this question deserves to be answered in favour of the assessee and against the revenue. Discussion 6. We have considered the submission of learned counsel for the department and the assessee. Presently we confine ourselves to the question no. 1 as quoted above. The relevant provisions to consider this question are the provisions of Section 12A and 12AA of the Act which are reproduced below : - Section 12A:- The provisions of section 11 and Section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely : - (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1st day of July, 1973 or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution ....
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.... trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquires as he may deem necessary in this behalf ; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution ; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant; Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. [(1A) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they ere on that day.] (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry o....
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....d of the month in which the application was received. Thus, this provision prescribes the period of six months to pass an order either granting or refusing registration. Therefore, if an order is not passed within the period of six months, the grant cannot be deemed leaving the words 'refusing registration'. (iii)One of the most important condition for availing the exemption under section 11 and 12 of the Act is the grant of registration under Section 12AA of the Act and as such an order is necessarily required to be passed by the Commissioner either granting or refusing the registration. In case after considering the facts and circumstances the C.I.T. Comes to the conclusion that the person applying for registration is not entitled to registration under Section 12A of the Act then he may refuse registration and the consequence would be that such a person shall not be entitled to the benefits provided in Section 11 and 12 of the Act. Thus no presumption of grant of registration can be inferred from the plain words of Section 12AA (2) of the Act which requires the order to be passed in writing by the competent authority either granting or refusing the registration. (iv)Constru....
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.... provisions, and presumption and held that the distinction was well discernible. 14. Similar view has been taken by the Hon'ble Apex Court in State of Kerala and others Vs. Dr. S.G. Sarvothama Prabhu, Commissioner of Income Tax V. Mysodet (P) Ltd. and Garden Silk Mills Ltd. and another V. Union of India and others. 15. Rule 165 of the Explosive Rules, 1983, provide that if an application for renewal has been filed within time and it is not being disposed of by the licensing authority, the licence shall be deemed to be in force until such date as the licensing authority renews the licence or until an intimation that the renewal of the licence is refused and is communicated to the applicant. The rules provide for a fiction only for the transitory period, but neither the Explosive Act nor the rules framed thereunder envisage deemed renewal of a licence, thus the authorities have been passing the order without complying the requirement of the statutory provisions which cannot be held to be a sign of good governance." (vii)In the case of Rana Pratap Singh Vs. State of U.P. & Others (1996) Supp. AWC 92) a Full Bench of this Court, while considering the provision of Section 13 an....
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.... an other (1980) 4 SCC 647 Paras 6, 7, 8 and 9. (ix)The performance of duty required to be done by the competent authority under Section 12AA (2) of the Act within the period specified therein and related to a right which may accrue to a person on grant of registration, the provision of time will be directory and not passing the order within the period specified shall not automatically result in deemed grant of registration. (x)In the case of Nassurddin another Vs. Sita Ram Agarwal (2003) 2 SCC 577 paras 37 and 38) the Hon'ble Supreme Court has laid down the law that "it is a well settled principle that if an act is required to be performed by a private person within the specified time, the same would ordinarily be mandatory but when the public functionary is required to perform the public function within time frame, the same shall be held directory unless consequence therefor are specified." Similar view has been taken by Hon'ble Supreme Court in the case of Balwant Singh and others Vs. Anand Kumamr Sharma and others (2003) 3 SCC 433 para 7. (xi)There is nothing in Section 12AA(2) of the Act which provides that the authority concerned shall have no power to pass order eit....
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.... no control over those entrusted with the duty and at the same time would not promote the main object of the Legislature, it has been the practice of the courts to hold such provisions to be directory only, the neglect of them not affecting the validity of the acts done." 45. In Craies on Statute Law VIII Edn. at page 262, it is stated thus :- "It is the duty of courts of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed That is each case you must look to the subject-matter, consider the importance of the provision and the relation of that provision to the general object intended to be secured by the Act, and upon a review of the case in that aspect decide whether the enactment is what is called imperative or only directory." 9. In the following three judgments in the case of Commissioner of Income Tax-I, Salem Vs. Sheela Christian Charitable Trust (2013) 214 Taxman 551, Commissioner of Income Tax Vs. Karimangalam Onriya Pengal Semipu Amaipu Ltd. (2013) 214 Taxman 666 and Director of Income Tax (Exemption), Chennai Vs. Anjuman-e-Khyrkhah-e-Aam (2011) 200 Taxman 27 (Mad.) the Madras High C....